Lexgroup Newsletter (Issue No. 319)

Date: Jun 2019

Taiwan and Mainland

1. Amendment to Act Governing Relations between the People of the Taiwan Area and the Mainland Area

On 24 April 2019, the President announced the amendment to the Act Governing Relations between the People of the Taiwan Area and the Mainland Area, and the effective date for this amendment will be further determined by the Executive Yuan.  The penalties of the following activities will be raised, provided however that other than those imposed for agent's activities, the penalties will be exempted if the violation is trivial and has been cured:

(1) Where an investor invests in Taiwan area without prior approval.

(2) Where an invested company fails to submit the information required, makes the filing with untrue or incomplete information, or circumvents, impede, or refuse the inspections of the regulator.

(3) Where an invested company violates in the requirements in respect of the re-investment procedures.

(4) Where an investor or an invested company fails to apply for capital verification, or makes the filing with untrue or incomplete information.

(5) Where the agent of an investor willfully or by gross negligence makes the filing with untrue information.

Reported by: Kangshen Liu / Will Chen

Labor

2. Amendments to Labor Standard Act and Labor Pension Act

On 29 April 2019, the Legislative Yuan passed its third reading of the amendments to Labor Standards Act and Labor Pension Act.  We summarize the key points below:

(1) Amendment to Labor Pension Act: 

(a) This Act also applies to foreigners who works in Taiwan with permanent alien residence certificate.

(b) Employers who actually engage in labor work, self-employed operators and commissioned workers may also voluntarily contribute their wage to the labor pension and apply for tax preference under this Act.

(c) Workers who apply for lump-sum pension payment may open a specific account for the deposit of pension.

(d) The statute of limitation of right for  a worker's survivor or designated person to apply for pension is extended to 10 years.

(e) The fine imposed on an employer for the failure to pay the severance or pension under the applicable laws is increased.

(f) For an employer who has been imposed on the fine or late payment charges for violations of this Act, the competent authority shall publicly announce its/his/her name or its responsible person's name and the amount of fine.

(2) Amendment to Labor Standard Act:

(a) The definition of dispatch business entity, demand dispatch entity, dispatched worker and dispatch contract are added.

(b) It provides that the dispatch contract shall be a contract with an indefinite term.

(c) If the dispatch entity fails to pay wages to its dispatch worker(s), and fails to make correction after sanctioned or ordered by  the competent authority, the dispatched worker(s) may request the demand dispatch entity to make such payment, and the demand dispatch entity shall make the payment within 30 days.  The demand dispatch may claim against the dispatch entity for reimbursement afterwards.

Reported by: David Tsai / Paul Hsu

Copyright Act

3. Amendment to Article 87 and 93 of Copyright Act

On 16 April 2019, the Legislative Yuan passed the third reading of the amendments to Articles 87 and 93 of the Copyright Act.  The amendments are to respond the new type of torts incurred from emerging technology under which persons who without due authorization provide channels for people to connect to the counterfeiting websites for watching illegal videos through set-top box or apps sold on the market will be subject to civil and criminal liabilities.

(1) Malicious infringement of copyright through digital measures:

Anyone knowing that works provided by others through public broadcast and public transmission infringe economic rights of copyright and having the intention to make the public to access such works through the internet would be deemed as infringement of copyright if he/she: (a) provide the public with the computer program converging the website of such works; (b) instruct, assist in, or setting the access for the public to use the computer programs mentioned in (a); or (c) manufacture, import or sell the equipment or devices with the computer programs mentioned in (a).  It also specifies that if anyone uses advertisement or adopts other aggressive measures to instigatee, induce, stir up or persuade the public to use such access shall be deemed as having the "intension" to conduct the above. 

(2) Criminal liabilities being imposed :

The violator of the above will be subject to an imprisonment of no more than 2 years, detention, or in lieu thereof or in addition thereto a fine of not more than NT$500,000.  

Reported by: Chenchi Wang / Bella Chiu

Patent Act

4. Amendment to Patent Act

On 16 April 2019, the Legislative Yuan passed the third reading of the amendment to the Patent Act.  We summarize the key points below:

(1) Divisional applications:

The current Act allows for a divisional application for inventions be filed within thirty (30) days after the date on which an approval decision for the original patent application in the first examination stage is served.  The newly amended Act relaxes the requirements that a divisional application may be filed within three (3) months after the date on which an approval decision in either the first examination stage or the reexamination stage for the original patent application; and that the same rules and time limits for filing a divisional application for inventions shall also apply to patent applications of utility models.

(2) Invalidation procedures:

The current Act provides that a requester of invalidation action may submit invalidation reasons or evidence within one (1) month after the date of filing the said action.  The newly amended extends the time limit from one (1) month to three (3) months and on the other hand restrict that the reasons or evidence submitted after the time limit shall not be taken into consideration.  The newly amended Act also specifies that the period of time during which the patentee may file a request for post-grant amendments.

(3) Post-grant amendments of utility model patent:

The newly amended Act specifies the circumstances under which a request for post-grant amendments of utility model patent can be filed including those where an invalidation action or a technical evaluation report on said utility model patent is requested and still under examination, or an litigation case is involved, and provide that the specific patent agent shall conduct substantive examination on such post-grant amendments instead of formality examination under the current practice.

(4) The term of protection of design patent  

The term of protection for design patents is to be extended from the current 12 years to 15 years.

(5) Preservation of patent files:

In order to solve the problem of file storage space, the newly amended Act provides that only those patent files with preservation value need be kept permanently.  For others, they only need be kept for 30 years or less.  

Reported by: Chenchi Wang / Bella Chiu

SITEs & SICEs

5. Rulings Related to Relaxation of Personnel Double-hatting for Responsible Persons and Associated Persons of SITEs and SICEs

On 19 April 2019, the Financial Supervisory Commission (FSC) issued 3 rulings under which the double-hatting restrictions imposed on the responsible persons and associated persons of securities investment trust enterprise (SITEs) and securities investment consulting enterprise (SICEs) is amended to be more flexible.  We summarize the key points below:

(1) To allow the internal audit or legal compliance of a SITE to concurrently serve as the same function of the subsidiary, which is the general manager of a private equity fund, of such SITE. 

(2) To allow the internal audit or legal compliance of a SITE/SICE to concurrently serve as the same function of the domestic financial technology enterprises, domestic insurance agencies/brokers which are the subsidiaries of such SITE/SICE; and the said personnel of a SITE may also concurrently serve as the same function of the domestic venture capital enterprises, venture capital management and consulting companies which are the subsidiaries of such SITE.

(3) To allow the internal audit, legal compliance, risk management, and accounting of a SICE which the subsidiary of a SITE to concurrently serve as the same function of such SITE.

Reported by: Jeffrey Liu / Cindy Chien

6. Amendment to Securities Investment Trust Enterprises and Securities Investment Consulting Enterprises Self-Regulations of the Information Security of the Emerging Technology

On 22 April 2019, the Securities Investment Trust and Consulting Association  announced the amendments to the Securities Investment Trust and Consulting Association Self-Regulations of Information Security of Cloud Computing, Social Media and Mobile Devices where : (1) the name of these Self-Regulations are changed to the "Securities Investment Trust Enterprises and Securities Investment Consulting Enterprises Self-Regulations of the Information Security of the Emerging Technology", and (2) certain requirements in connection with security controls for the internet of things (IoT) devices and anti-phishing websites for IoT devices are added.  Where necessary, SICE/SITE shall amend its internal controls or operation rules. 

Reported by: Jeffrey Liu / Eliza Lee

Insurance

7. Ruling for Trading of Funds by Discretionary Investment-oriented Policy 

On 12 April 2019, the Financial Supervisory Commission (FSC) announced a ruling to specify that where an insurance enterprise mandates a SITE to manage its assets in a separate account, the SITE should not charge the management fee in respect to the parts where they invest such assets in the funds managed by themselves, and should invest in the share class for institutional client, if any.

Reported by: Jeffrey Liu / Deborah Lee

8. Draft Amendment to Regulations Governing Implementation of Internal Control and Auditing System of Insurance Enterprises

On 23 April 2019, the FSC announced the draft amendment to the Article 36-2 of the "Regulations Governing Implementation of Internal Control and Auditing System of Insurance Enterprises ".  We summarize the key points below:

(1) Except for the branches of foreign insurance companies in Taiwan and insurance cooperatives, an insurance company shall, based on its business scale, business conditions, and management requirements, establish corporate governance personnel and officer.  

(2) The scope of corporate governance matters is specified, such as relevant matters related to board meetings and shareholders meetings, and provision of materials required for directors and supervisors to exercise their functions, etc.  

(3) The qualification and continuous education of corporate governance officer is specified, and the corporate governance officer shall be the managerial personnel.  

(4) Unless otherwise provided by law, the corporate governance officer may concurrently be served by another personnel, provided however that there shall not exist any event of conflict of interest conflict or the violation of internal control system.  

Reported by: David Tsai / Will Chen

Electronic Payment

9. Draft Amendment to Rules Governing the Administration of Electronic Payment Business and Issuance of Relevant Rulings

(1) On 18 April 2019, the FSC announced the draft amendment to the Rules Governing the Administration of Electronic Payment Business.  We summarize the key points below:

(a) To allow electronic payment institutions to provide the message conveyance services between users;

(b) To allow electronic payment institutions to issue the value-stored cards dedicated for the electronic payment accounts and to permit electronic payment institutions to outsource the sales of such value-stored cards;

(c) To establish the database of connections between electronic payment institutions and recipient users, and reinforce review mechanism for certain recipient users;

(d) To specify the contents of investigation and evaluation by electronic payment institutions for recipient users in order to control risks;

(e) To amend the information of user payment instruction and the provision not apply to the user payment instruction and reconfirmation;

(f) To allow electronic payment institution to collect and make payment as an agent for certain payments such as government fee and mass transportation fees; and

(g) To allow electronic payment institutions to advance the payments for users under certain circumstances.

(2) On 24 April 2019, the FSC issued a ruling in connection with the Regulations Governing Cooperating with or Assisting Foreign Institutions in Engaging in Activities Associated with Electronic Payment Business within the Territory of the Republic of China (Regulations). We summarize the key points below:

(a) The collection and payment agent services for clients to use the electronic payment accounts conducting remittance offshore to pay for the real transactions on physical channels (the Services) and the settlement or foreign currency remittance for the payments under the Services by the electronic payment institutions are "other related activities approved by the competent authority" provided under the Regulations.

(b) The electronic payment institutions shall submit the feasibility analysis and legal compliance opinion issued by the local competent authority when filing the application.

Reported by: Stacy Lo / Deborah Lee

Taxation

10. Interpretations to Taxation Provisions of Gain from Bargain Purchase of Profit-seeking Enterprise

On 18 April 2019, the Ministry of Finance (MOF) announced a ruling providing that, according to the financial and accounting standards, the gain from bargain purchase of the shares in a company is unrealized interest, which shall be adjusted and reduced when the profit-seeking enterprise income tax is declared in the current year.  When the company subsequently disposes of the shares of the invested company, it shall calculate the profit and loss at the actual selling price minus the equity acquisition cost, which shall be taxed according to the Income Tax Act or the Income Basic Tax Act.

Reported by: Stacy Lo / Eliza Lee

11. List of Reportable Jurisdictions of Financial Account Information Automatic Exchange with Taiwan

The MOF announced on 18 April 2019 that Japan and Australia are listed in the Reportable Jurisdictions of Financial Account information automatic exchange with Taiwan under Paragraph 3, Article 25 of the Regulations Governing the Implementation of the Common Standard on Reporting and Due Diligence for Financial Institutions. 

Reported by: Stacy Lo / Hsiyen Hsu

Company Act

12. Ruling on Article 228-1 of the Company Act

On 9 April 2019, the Ministry of Economic Affairs issued a ruling in respect of Article 228-1 of the Company Act.  After a proposal of earning distribution or makeup of loss for every quarter or half fiscal year prepared in a board meeting, the proposal for distribution of stock dividend shall be submitted to the shareholders' meeting for approval without another approval in the board meeting, while the proposal for distribution of cash dividend shall be approved in another board meeting without submission to the shareholders' meeting for resolution.

Reported by: Mike Lu / Cindy Chien

Act Governing Food Safety and Sanitation

13. Amendment to Act Governing Food Safety and Sanitation

On 22 March 2019, the Legislative Yuan passed the amendments to Articles 3, 18-1, 47 and 57 of the Act Governing Food Safety and Sanitation.  The President promulgated the amendment for enforcement on 17 April 2019.  Please refer to Lexgroup Newsletter (Issue No. 317) issued on 3 April 2019 for key points of these amendments.

Reported by: Kangshen Liu / Chenchi Wang

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